Bitcoin fell almost 5%, dropping to $22,200 in less than 20 minutes. This unexpected decline can be explained by a reason that not everyone seems to think about. Indeed, this crash came just a day after operational problems erupted at Silvergate Bank.
The real cause of the accident is elsewhere
The price of Bitcoin (BTC) dropped significantly the day after the operational incidents identified by Silvergate Bank. The fall in the price of BTC in the market happened in less than 20 minutes. It is logical to assume that these two events are connected.
This is not what some analysts think. On the contrary, the two events followed each other too quickly for the same analysts to consider a correlation.
For example, an intraday trader and creator of trading systems named Skew spoke about this on Twitter. He gave an explanation why bitcoin has crashed in the last few hours.
In his post, he wrote:
“This move was driven by a large spot sell by Binance directly into the stacked long zone.”
If the trader’s theory is to be believed, the fall in the price of bitcoin cannot be the result of Silvergate Bank’s problems. In any case, the banking turmoil has caused a stir in the crypto industry.
Industry responds to Silvergate Bank challenges
On March 2, Silvergate Capital Corporation reported that it was facing a number of operational issues. The California-based cryptocurrency-focused financial institution has admitted it cannot submit its annual report by March 16.
The reason for this inability is that the financial company is incurring a $1 billion loss recorded in the fourth quarter of 2022 following the FTX case. She hinted that it would be difficult for her to continue the usual course of her activities.
This announcement shocked the crypto industry. Several companies have terminated or suspended operations associated with the financial institution.
This is the case of Coinbase taking the floor to announce that the platform will no longer accept or initiate payments to or from Silvergate Bank.
Cryptocurrency companies aren’t the only ones jumping ship following the financial firm’s announcement. Many investors also reacted immediately after the announcement.
Coinglass noted an exponential rise in liquidations. The analyst firm noted over $240 million in long and short liquidations in the last 24 hours.
Recall that Silvergate shares lost almost 32% in market value after the announcement.